Crypto Has Grown Outside of Regulatory Oversight but Has No Intrinsic Value, Says Bank of England Deputy Governor
The Deputy Governor of the Bank of England, Sir Jon Cunliffe, says that the collapse of the FTX exchange has exposed the vulnerabilities of crypto assets.
In a Sky News interview, Sir Cunliffe says that crypto assets have existed in a regulatory vacuum over the last decade.
“I think what it [the collapse of FTX] tells you is there’s a lot of activity that’s developed over the last 10 years on the trading and sale of crypto assets. Assets without any intrinsic value, so they’re incredibly volatile. And all of that has grown up outside of outside of regulation.”
According to Sir Cunliffe, regulations would have protected crypto investors and traders against the improprieties that FTX is alleged to have committed.
“What we saw I think in FTX, and there are investigations going on and I’ve got no knowledge of what’s actually happening inside that.
But what we seem to have seen is that a number of activities, which in the regulated financial sector would have had certain protections and regulations around them, happened in an unregulated sector.
And then we saw things like clients’ money appears to have gone missing, conflicts of interest appear to have happened between different operations.
Transparency, audit and accounting, all of the perhaps boring things that happen in the normal financial sector, didn’t really happen for that set of activities. And as a result, I think a lot of people have lost a lot of money.”
According to Sir Cunliffe, investing in crypto assets such as Bitcoin (BTC) should be regulated in a manner that arms potential investors with the full information as to what they are getting themselves into.
“Investing in crypto assets like Bitcoin and the like is a very speculative activity. Their value can go up, but it can go down…
I think if people invest in that sort of thing. they need to know what they’re doing, they need to know what it is they’re actually buying. This is not a safe investment that you might put your money in for a length of time. It’s in effect, in my view, a gamble.
But we allow people to bet. If you then want to get involved in that, you should have the ability to do that in a place that is regulated, in the same way that if you gamble in a casino they’re regulated.
You should have the full information as to what you’re doing.”
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Author: Mark Emem
